(a) The administrator of a deferred compensation program under this chapter shall invest in contracts that

(1) allow for deferment of state and federal income tax until benefits are received under the program; and

(2) do not provide for deferral of state and federal income tax until the benefits are received under the program.

(b) A participating employer may designate that employee contributions consist of deferred tax contributions, Roth contributions, or both. In the absence of an affirmative election to make Roth contributions, an employee's contribution shall be considered to consist entirely of deferred tax contributions.

(c) Contributions made on behalf of a participating employee for any calendar year, whether deferred tax contributions or Roth contributions, shall not exceed the dollar limitation set out in 26 U.S.C. 402(g) (Internal Revenue Code) in effect for the calendar year, subject to the provisions of 26 U.S.C. 414(v) (Internal Revenue Code). Contribution amounts in excess of the applicable dollar limits shall be distributed to the participant not later than April 15 after the close of the plan year to which the excess contribution relates. To the extent that a participating employee's contributions are reduced or returned to comply with the limitations of the plan, and the participant has allocated the contributions between deferred tax contributions and Roth contributions, the amount of the reduction or return shall be taken first from deferred tax contributions, to the extent of the contributions for the plan year, and, only after the reduction or return of all the deferred tax contributions, from Roth contributions for the plan year.

(d) Deferred tax contributions made on behalf of a participating employee for a plan year shall be allocated to the deferred tax contribution account of the participating employee, as determined by the administrator.

(e) Roth contributions made on behalf of a participating employee for a plan year shall be allocated to the Roth contribution account of the participating employee, as determined by the administrator.

(f) The administrator may establish additional rules and procedures governing the manner and timing of elections by participating employees to make or change the deferred tax contribution or Roth contribution election, as needed for compliance with federal and state law and as needed for efficiency and effectiveness of plan administration.